SEC Removes Legal Obstacle, Enabling UBS Crisis-Resolution Plan
SEC Decision Facilitates UBS Crisis Management Strategy
WASHINGTON, July 8 (Reuters) - The U.S. Securities and Exchange Commission told UBS Group on Wednesday that it would not object to certain securities transactions the bank may have to undertake if directed to do so by the Swiss regulator to ensure the bank's orderly resolution.
The SEC said it would not take enforcement action if UBS converted certain debt securities into equity without registering the offering with the U.S. regulator, removing a potential legal obstacle to the bank's crisis-resolution plans.
Key Details of the SEC Guidance
Here are some details:
Bail-In Mechanism Explained
• The guidance relates to a potential "bail-in" of the bank, a crisis-management tool designed to recapitalize a failing lender by converting designated debt securities into equity rather than relying on taxpayer support.
Legal Interpretation and Exemptions
• The SEC said a debt-to-equity exchange ordered by Switzerland's financial regulator would constitute an "offer" and "sale" of securities under U.S. law, but could qualify for an exemption from Securities Act registration requirements.
Cross-Border Legal Implications
• The letter helps address cross-border legal conflicts highlighted by Swiss authorities' failure to implement Credit Suisse's resolution plan and move instead to broker a rescue takeover by UBS.
Reporting and Editorial Credits
(Reporting by Michelle Price; Editing by Mark Porter)
